�۶���Ƶ

Alternative investments have transitioned from peripheral allocations to central pillars of institutional and private wealth portfolios. Amid persistent inflation, rising interest rates, and global uncertainty, investors are questioning the viability of traditional 60/40 portfolios. The shift is driven by the need for diversification, durable yield, and reduced reliance on public markets. Structures like multimanager platforms, evergreen formats, and curated fund-of-funds are enabling broader access. Private market AuM reached USD 11.7 trillion in mid-2022, with private wealth expected to contribute up to USD 1.3 trillion by year-end.¹ The focus is now on how best to allocate, not whether to do so.

Hedge funds are gaining renewed attention for their ability to manage volatility and provide risk mitigation. With 10% returns reported in 2024, including 2% alpha, institutions are seeking targeted exposures while private wealth clients favor accessible, branded multi-manager platforms.² Fund-of-funds vehicles offer liquidity and simplicity, making them attractive to wealth clients. Hedge funds are increasingly viewed as tools for navigating dislocation and market unpredictability, especially in the wake of pandemic and tariff-driven disruptions.

Real assets are undergoing a transformation from ownership to credit exposure. Private real estate debt has grown 25% since 2015, driven by yield-seeking and asset-backed protection.³ Infrastructure is attracting significant capital due to policy alignment and structural demand, particularly in renewable energy and digital infrastructure. Private wealth is increasingly participating, with strategic regional allocations in markets like Japan and Australia. The shift reflects a maturing market where packaging and access are as critical as the assets themselves.

Investor behavior is evolving, with a growing demand for control, flexibility, and simplicity. Perpetual structures, multi-manager platforms, and semi-liquid formats are blurring the lines between institutional and private portfolios. Multi-alternative strategies are rising, combining exposure to private equity, credit, real estate, infrastructure, and hedge funds. As capital flows into alternatives, concerns about dilution of alpha and illiquidity premia are mounting. Manager quality and governance are becoming paramount, especially when offering institutional-grade products to private clients.

Alternative investments are entering a mature phase marked by elevated scrutiny and a focus on preserving value. The proliferation of products has brought analysts and media into closer engagement, and investors are more educated and discerning. The challenge ahead is to maintain the diversification benefits and illiquidity premium while navigating increased competition and product saturation. Investors are diversifying not just by asset class but by the function each performs during market dislocation, positioning for long-term resilience and growth.

¹ US wealth management: A growth agenda for the coming decade
² Hedge Fund Outlook: Allocations set to grow in 2025
³ Private Market Opportunities: The Case for Real Estate Debt. (PDF)